Telegram has been called the “cryptocurrency world’s preferred messaging app” by many media outlets including Forbes, and more than 84 percent of Blockchain-based projects have an active Telegram community.
For over 48 hours now, Telegram has been under a ban by internet service providers in Russia. This was triggered by Telegram’s refusal to give encryption keys to Russian security agencies.
Telegram’s founder, Pavel Durov, said that they have not seen a significant drop in user engagement since the beginning of the ban. In fact, users have bypassed the ban by using VPNs. Durov has said that he will be giving Bitcoin grants worth millions of dollars to individuals and companies running VPNs, calling this the “Digital Resistance”.
Telegram launch, founders and users
Telegram was founded in 2013 by brothers Nikolai and Pavel Durov from Russia. Previously, they notably founded the “Russian Facebook” called VKontakte. In 2014, however, they sold and left the company due to a clash with the government regarding users’ privacy and freedom of speech.
Telegram already had 100 million monthly active users by February 2016. It was recently announced that this number has now reached 200 million.
Based on data from Tokenmarket, Telegram has more ICO discussion groups than any other messaging application as shown by the graph below from Telegram’s ICO white paper.
Image source: Telegram’s ICO white paper, page 12
The number of Telegram followers of a crypto project as well as the rate of growth of the community has been used as a metric for success by investors. Some projects even reach the limit of 50,000 followers and they create a second group.
The Telegram Open Network (TON) will be the launch pad for “The Open Network” and in 2021 the “Telegram” name will be dropped, as clearly stated in the white paper.
“By 2021 the initial TON vision and architecture will have been implemented and deployed. TON will then let go of the “Telegram” element in its name and become ‘The Open Network’.”
Telegram ICO goals, funding rounds and amount raised
In the white paper Telegram identifies several challenges for mainstream adoption of Blockchain technology and cryptocurrencies: scalability, complexity for the average user and availability of goods and services that can be bought or sold with cryptocurrencies.
Given that Telegram could not find any existing Blockchain platform that would allow taking cryptocurrencies mainstream in 2018, they decided to develop the required Blockchain platform themselves.
So far, Telegram has conducted two pre-ICO rounds of 850 mln dollars each for a total of 1.7 bln dollars raised, although the number of investors for each round was under 100. A third pre-ICO round may be considered and, if Telegram decides to do an ICO, they could raise a record amount of up to $2.6 bln.
The development team will keep 4 percent of the tokens with a four-year vesting period while 52 percent will be for the TON Reserve and 44 percent for investors. It is expected that investors will receive the TON tokens (Grams) in Q4 2018.
It is also worth noting that some prominent investors in the crypto space have actually decided not to invest in this project, as pointed out in some articles.
TON vs others
So far, some of the largest ICOs have been Filecoin ($257 mln), Tezos ($232 mln) and Polkadot ($145 mln). The TON technical white paper provided a comparison table with some projects.
Image source: Telegram’s ICO technical white paper, page 74
According to the white paper, TON positions itself as a “5th Generation” Blockchain. Telegram’s plan with this ICO is obviously to build a Blockchain platform similar to Polkadot, and not just a better app. Telegram’s user base could help to launch this new Blockchain platform with its 200 million current active monthly users.
Polkadot, which appears in the table as a 4th Generation Blockchain along with EOS and Cosmos, raised a total of $145 mln while TON has already raised $1.7 bln in the two pre-ICO rounds. It will be extremely interesting to see which innovations TON will develop with this huge amount of money.
Currently based in Dubai, the Telegram team is under pressure since Russia’s Federal Security Services (FSB) is ordering them to hand over the encryption keys.
Telegram has appealed the decision but, given that Telegram’s founders were forced to sell their previous company after losing a legal battle with the Russian government, the situation is very concerning. The main benefit that Telegram offers to its users is privacy and security; if they give the encryption keys away, users’ private information would then be compromised.
Moreover, Russia isn’t alone in demanding access to encrypted messages. Iran also asked Telegram in recent months for information and requested the blocking of several channels. Iran’s Interior Minister Abdolreza Rahmani Fazli said the misuse of social networks such as Telegram by some individuals was “causing violence and fear” and that “such behavior will be smashed”. Durov responded to Iran on Twitter:
Iranian authorities are blocking access to Telegram for the majority of Iranians after our public refusal to shut down https://t.co/9E4kXZYcP9 and other peacefully protesting channels.
— Pavel Durov (@durov) December 31, 2017
Recently it was announced that Russia will finally ban Telegram messenger over the encryption dispute. Russia accounts for only about 7 percent of the Telegram user base, but it could be important to Durov because it is his country and because it constitutes a precedent of a real battle for the freedom of expression.
However, given Telegram’s importance to the crypto community as the preferred messaging app, its active user base of over 200 million, and also its use as a metric of success by investors, it is likely that banning Telegram would not be an easy task even for Russia.
Telegram’s founder Durov confirmed the ban from Russia recently on his official Telegram channel, as well as the importance of VPNs:
“Despite the ban, we haven’t seen a significant drop in user engagement so far, since Russians tend to bypass the ban with VPNs and proxies. We also have been relying on third-party cloud services to remain partly available for our users there.
To support internet freedoms in Russia and elsewhere I started giving out bitcoin grants to individuals and companies who run socks5 proxies and VPN. I am happy to donate millions of dollars this year to this cause, and hope that other people will follow. I called this Digital Resistance – a decentralized movement standing for digital freedoms and progress globally.”
How to circumvent the block
There are different methods of circumventing the block:
Proxies are the first option, which give users anonymity by hiding their IP addresses. However, they do not protect the data by encryption from the Internet Service Providers (ISPs).
VPNs offer this data protection from ISPs to users. The possible problem with traditional VPNs is that users are shifting their trust from their ISP to a centralized VPN. These VPNs have users’ information that they could give to a government or a law enforcement agency if requested.
This is why decentralized VPNs (dVPNs) are the next step for users’ anonymity and data protection. Decentralized VPNs are using Blockchain technology and are backed by renowned investors such as Sequoia, Andreessen Horowitz, and Tim Draper’s DFJ.
While Russia and Iran are trying to ban Telegram, they could face strong resistance from the users who might start using services such as decentralized VPNs.
Furthermore, the huge amount of funds raised by Telegram in their two pre-ICO rounds means that they have a lot of resources to improve their services and to protect themselves from attempts to obtain the encryption keys or to ban the app.
Telegram plays a key role in the crypto community and beyond in ensuring the security and privacy of its users. Even Edward Snowden, who previously criticized Telegram’s security model, now supports Telegram’s resistance and its leadership against the Russian government’s limiting actions.
I have criticized @telegram‘s security model in the past, but @Durov‘s response to the Russian government’s totalitarian demand for backdoor access to private communications—refusal and resistance—is the only moral response, and shows real leadership. https://t.co/KtZDpu33wh
— Edward Snowden (@Snowden) April 17, 2018
These bans might actually help attract more people from the crypto community as the messenger improves its efforts to keep users’ information anonymous and secure.